Philadelphia Trust, Safe Deposit & Insurance v. Audenreid

Mr. Justice Woodward

delivered the opinion of the court, May 7th 1877.

Of the three statements annexed to the case stated, setting out the claim of the plaintiffs below in each of the three alternative contingencies specified, the third was adopted by the District Court. The decision was based on the theory that the contract rights of the parties were fixed by the insolvency of the Oakdale Cóal and Mining Company on the 31st of December 1873, and that the liability of the defendants could not be varied by the subsequent collections, even though the plaintiffs credited them on their books as of that date. As the subseqirent collections amounted to $9031.33, the court held that the sum of $32,098.72, two-thirds of which the defendants had paid, was increased to $41,130.05, and entered judgment for $6020.87, 'in favor of the plaintiffs.

By the terms of the three agreements between the parties, the plaintiffs below stipulated that they would make advances to the Oakdale company to the amount of $50,000, to be reimbursed out of the proceeds of coal to be shipped to them, at the rate of fifteen cents per ton, which they were to retain. Under the original agreement of the 20th of December 1872, the plaintiffs were constituted agents to receive and sell the coal of the Oakdale company. Settlements were to be made on the Thursday preceding the third Saturday of every month, and when sales should be made on time, it was provided that they should be cashed as of that day, a rebate of interest to be allowed for the term of credit not then expired. All sales, it was expressly stipulated, were to be guaranteed by the plaintiffs. The covenant on the part of the defendants was to guarantee the plaintiffs “ against all loss by reason of all or any advances made under or in pursuance of this agreement, to the extent of two-thirds of the amount advanced and not reimbursed.” Any failure of the plaintiffs to reimburse themselves out of funds in their hands, was not to affect the obligation; but they were required, after notice by the defendants, to “ appropriate, all funds then in their hands and moneys thereafter received to their own reimbursement, and in discharge of this guaranty.”

No essential change was made by the supplemental agreement of the 26th of April 1873, in the relations or rights of the parties. It was executed in order to define and explain the terms of the original agreement. Until notice by the defendants to retain the fifteen cents per ton for their reimbursement for advances, the plaintiffs were authorized to permit the Oakdale company to draw or use all the funds in their hands. After notice, they were to be at liberty to apply any moneys held or to be received by them “ to discharge the unguaranteed portion of their claim; always, however, after notice given, applying the fifteen cents per ton to liquidate the advances.” Any question that could arise under these clauses in the supplement, is aside from this inquiry, as the notice in contemplation was never given.

On the 31st of December 1873, the plaintiffs had credited the “ Oakdale company’s advance account” with fifteen cents per ton on the proceeds of coal sold to the amount of $8869.95, resulting in a balance due them of $41,130.05. They had sold coal for the company for which the sum of $9031.33 was due, but was not paid until after the 1st of January 1874. This sum was credited to the company as of the 31st of December 1873, leaving a balance of $32,098.72 owing to the plaintiffs. The defendants have paid two-thirds of this balance, $21,399.15, in discharge, as they allege, of their covenant of guaranty. The single question is whether or not they are subject to further liability.

By express stipulation, the plaintiffs guaranteed all sales they should make of the Oakdale company’s coal. By stipulation .equally express, they were to settle with the company’s treasurer on the Thursday before the third Saturday of every month for the coal received and sold during the preceding month. They were to account for sales on time precisely as they were to account for sales for cash, except that a rebate of interest for the unexpired term of credit was to be allowed. It was indifferent to the coal company, therefore, and consequently equally indifferent to the defendants, whether the coal should be sold on credit or for cash. In either case the liability of the plaintiffs to account was fixed. The contract was for a single' year, and terminated on the 31st of December 1878. At that date the extent of the liability of the defendants depended on the state of the “advance account” between the company and the plaintiffs. Under the terms of the agreement, what sum remained to be reimbursed ? The coal for which payment was received after the 1st of January 1874, had been sold in 1873, during the existence of the contract. And it was for coal sold— sold on any terms they might choose to make — and not for the money they received for it, that the plaintiffs were to account. And they were to account when the sales were made, and not when the price was paid. The guaranty of the defendants was “to the extent of two-thirds of the amount advanced and not reimbursed.” On the 31st of December 1873, the plaintiffs had been “ reimbursed” to the extent of $8869.95 by the fifteen cents jier ton retained out of the proceeds of coal sold and settled for. This was the reimbursement fund specially designated in the original agreement. They had been paid $9031.33 by sales of coal, the price of which was afterwards collected. Why was not this payment reimbursement on the advance account ? If the Oakdale company had paid the sum in cash, is it possible that the plaintiffs would have been entitled to apply it to the unguaranteed portion of their claim ? To “reimburse” is to “pay back;” and the primary meaning of the Avord is to be imputed to it where that meaning is not controlled by contract stipulations. Here, it has not been so controlled, for the contingency of notice did not arise in which, under the first supplemental agreement, the plaintiffs were to be at liberty to apply any funds in their hands, except the fifteen cents per ton, to discharge the ungaranteed-one-third of their advances.

Under a construction of these agreements which seems obvious and unmistakable, there is no room for the introduction into the controversy of any question relating to the application of payments.

The judgment is reversed, and judgment is entered for the defendants below pursuant to the terms of the case stated, with costs of suit.